MEMORANDUM OVERRULING OBJECTIONS TO CONFIRMATION ?· under chapter 11 of the Bankruptcy Code on October…

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  • UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

    In re:

    TRIBUNE COMPANY, et. a1, 1

    Debtors

    CHAPTER 11 (Jointly Administered)

    Case No. 08-13141 (KJC) (Re: D.I. 11399, 11836, 11458)

    MEMORANDUM OVERRULING OBJECTIONS TO CONFIRMATION OF THE FOURTH AMENDED PLAN OF REORGANIZATION

    FOR TRIBUNE COMPANY AND ITS SUBSIDIARIES AND DENYING CLARIFICATION MOTION'

    BY: KEVIN J. CAREY, UNITED STATES BANKRUPTCY JUDGE

    Before the Court for consideration is the Fourth Amended Joint Plan of Reorganization

    for Tribune Company and Its Subsidiaries Proposed by the Debtors, the Official Committee of

    Unsecured Creditors, Oaktree Capital Management, L.P., Angelo Gordon & Co., L.P., and

    JPMorgan Chase Bank, as revised (the "Fourth Amended Plan"). 3 The DCL Plan Proponents

    seek confirmation of the Fourth Amended Plan, but objections to confirmation filed by the

    'The chapter 11 case filed by Tribune Media Services, Inc. (Bky. Case No. 08-13236) is jointly administered with the Tribune Company bankruptcy case and 109 additional affiliated debtors pursuant to the Order dated December 10, 2008 (docket no. 43). An additional debtor, Tribune CNLBC, LLC (formerly known as Chicago National League Baseball Club, LLC) filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code on October 12, 2009 (Bky. Case No. 09-13496), and is also jointly administered with the Tribune Company bankruptcy case pursuant to this Court's Order dated October 14, 2009 (docket no. 2333). The debtors in the jointly administered cases are referred to herein as the "Debtors."

    'This Memorandum constitutes the findings of fact and conclusions of law, required by Fed.R.Bankr.P. 7052. This Court has jurisdiction over this matter pursuant to 28 U.S.C. 1334 and 157(a). This is a core proceeding pursuant to 28 U.S.C. 157(b)(1) and (b)(2)(A), (B), (L), and (0).

    3 The Debtors, the Official Committee of Unsecured Creditors (the "Creditors' Committee"), Oaktree Capital Management, L.P. ("Oaktree"), Angelo Gordon & Co., L.P. ("Angelo Gordon") and JPMorgan Chase Bank ("JPM") may be referred to jointly herein as the "DCL Plan Proponents." At the hearing on June 7, 2012 the Fourth Amended Plan (docket no. 11399) was admitted into evidence as DCL Exhibit 3000. Since then, the Fourth Amended Plan has been revised. (docket no. 11836).

  • following parties remained unresolved: (i) Aurelius Capital Management, L.P. ("Aurelius")

    (docket nos. 11664 and 11753), (ii) Law Debenture Trust Company of New York ("Law

    Debenture") (docket no. 11668), (iii) Deutsche Bank Trust Company of Americas ("Deutsche

    Bank") (docket no. 11667), (iv) Wilmington Trust Company ("WTC") (docket no. 11666), (v)

    Citadel Equity Fund Ltd. and Camden Asset Management LP (together,"Citadel Camden")

    (docket no. 11659), (vi) EGI-TRB LLC ("EGI") (docket no. 11658), (vii) certain former

    directors and officers of the Debtors (the "D&Os") (docket no. 11657), and (viii) F. Ashley

    Allen, Catherine M. Hertz, Michael D. Slason, and Louis J. Stancampiano ("Certain Former

    Employees") (docket no. 11661). 4

    The DCL Plan Proponents responded to the objections to confirmation of the Fourth

    Amended Plan by filing the Memorandum of Law in Support of Confirmation and Omnibus

    Reply to Objections to Confirmation (docket no. 11746). Other parties weighed in by filing

    replies to some of the objections, including (i) the Statement of Robert R. McCormick Tribune

    Foundation (the "McCormick Foundation") and Cantigny Foundation in Response to Objection

    of Aurelius Capital Management, LP (docket no. 11725), (ii) the D&Os' Reply to the Objection

    of Aurelius Capital Management, LP (docket no. 11739), (iii) the D&Os' Joinder to the

    Statement of the Robert R. McCormick Tribune and Cantigny Foundations (docket no. 11740),

    and (iv) the Bridge Agent's Reply, and Joinder to the DCL Plan Proponents' Reply, to the

    4 The Plan Proponents resolved the objections to confirmation filed by the State of Michigan, Department of Treasury (docket no. 11562), the United States (on behalf of the Internal Revenue Service) (docket no. 11653), the Missouri Department of Revenue (docket no. 11656), and certain former employees and/or directors (and beneficiaries of such former employees and /or directors) of the Times Mirror Company (the "TM Retirees") (docket no. 11720). A letter objection sent by Malcolm Berko (docket no. 11600) was listed as an objection to confirmation. Neither Mr. Berko nor anyone on his behalf appeared at the Confirmation Hearing to press this objection, which raises no issues of merit; accordingly, it is also overruled for his failure to appear and prosecute the objection.

    2

  • Objection of Aurelius Capital Management, LP (docket no. 11748).

    A hearing to consider confirmation of the Fourth Amended Plan was held on June 7 and

    8, 2012, and continued via conference call on June 11, 2012 (together, the "Fourth Amended

    Plan Confirmation Hearing").

    On June 18, 2012, the DCL Plan Proponents filed the revised Fourth Amended Plan

    (docket no. 11836) to incorporate modifications that resolved a number of objections to

    confirmation. On the same date, the DCL Plan Proponents also filed revised exhibits and other

    documents related to the Fourth Amended Plan, including (i) Plan Exhibit 13.1 - the Litigation

    Trust Agreement, the Litigation Trust Loan Agreement, the proposed Agreement Respecting

    Transfer of Documents, Information, and Privileges from Debtors and Reorganized Debtors (the

    "Debtors' LT Agreement"), the proposed Agreement Respecting Transfer of Documents,

    Information, and Privileges from the Official Committee of Unsecured Creditors (the

    "Committee's LT Agreement"). 5

    On June 20, 2012, Aurelius filed a letter objection with the Court (docket no. 11856)

    arguing that changes made to the proposed Committee's LT Agreement regarding the Litigation

    Trustee's discovery rights with respect to the Creditors' Committee did not address its concerns.

    The Creditors' Committee filed a letter in response (docket no. 11867) and a telephonic hearing

    was held on June 21, 2012 to discuss the issue.

    On July 11, 2012, a further hearing was held to address the Certain Former Employees'

    objection and Aurelius' objection to the Committee's LT Agreement. After colloquy with

    'Those documents were attached as exhibits to the revised Fourth Amended Plan and are also found at docket no. 11836.

    3

  • counsel at the July 11, 2012 hearing, the objection by the Certain Former Employees was

    withdrawn. At the July 11, 2012 hearing, the Court also suggested language to address Aurelius'

    objection to provisions in the proposed Committee's LT Agreement concerning certain

    discovery rights of the Litigation Trustee vis-a-vis the Creditors' Committee (including its

    retained professionals). The parties discussed the Court's proposed language and agreed to make

    further revisions to the affected paragraphs. However, Aurelius requested one additional change

    to which the Creditors' Committee did not agree. The revised language as otherwise agreed to by

    the parties at the July 11, 2012 hearing (without Aurelius' final change), was submitted under

    Certification on July 12, 2012 (docket no. 12001). The proposed Committee's LT Agreement, as

    revised, fairly addresses Aurelius' concerns. Accordingly, Aurelius' last remaining request is

    denied.

    For the reasons set forth herein, the remaining objections by Aurelius, Law Debenture,

    Deutsche Bank, WTC, EGI, Citadel Camden, the McCormick Foundation, and the D&Os will be

    overruled. Subject to submission of final revisions to the Fourth Amended Plan consistent with

    various resolutions that have been made, by agreement and consistent with this Memorandum,

    the Fourth Amended Plan will be confirmed.

    BACKGROUND

    The arduous journey for confirmation of a plan is chronicled in three previous decisions:

    the Confirmation Opinion dated October 31, 2011, In re Tribune Co., 464 B.R. 126

    (Bankr.D.Del. 2011) (the "Confirmation Opinion" or "Tribune I"), the Memorandum on

    Reconsideration dated December 29, 2011, In re Tribune Co., 464 B.R. 208 (Bankr.D.Del. 2011)

    (the "Reconsideration Decision" or "Tribune II"), and the Memorandum Regarding Allocation

    4

  • Disputes dated April 9, 2012, In re Tribune Co., 2012 WL 1190142 (Bankr.D.Del. April 9, 2012)

    (the "Allocation Decision" or "Tribune III"). 6 A detailed description of the Debtors (including

    an overview of the Debtors' business, their pre-petition debt structure, the 2007 leveraged buy-

    out (the "LBO")), and the chapter 11 proceedings (including the appointment of and

    investigation by the Examiner, plan mediation efforts, and the filing of four competing plans of

    reorganization) can be found in the Confirmation Opinion. Tribune I, 464 B.R. at 136-46.

    The Confirmation Opinion addressed two proposed competing plans of reorganization for

    the Debtors: (i) the Second Amended Joint Plan of Reorganization for Tribune Company and Its

    Subsidiaries (the "Debtor/Committee/Lender Plan" or the "DCL Plan") proposed by the Debtors,

    the Creditors' Committee, Oaktree, Angelo Gordon, and JPM, and (ii) the Joint Plan of

    Reorganization for Tribune Company and Its Subsidiaries (the "Noteholder Plan") proposed by

    Aurelius, Deutsche Bank, Law Debenture and WTC. After a confirmation hearing spanning

    more than two weeks, f